Managerial ability, investment efficiency and stock price crash risk
MetadataShow full item record
We examine empirically the effect of managerial ability on firm-level investment efficiency and how this affects future stock price crash risk. Using a managerial ability measure developed by Demerjian et al. (2012), the paper documents consistent evidence that the more able managers over-invest compared to their not-so-able counterparts, even after controlling for the effects of financial reporting quality and other firm specific determinants of investment efficiency. This evidence is robust to alternative proxies for investment efficiency. The empirical evidence also suggests that crash risk increases for firms with more able managers, primarily through the investment inefficiency channel. Overall, the study contributes to a better understanding of the influence of managerial ability on investment decisions in the context of diverging opinions regarding manager-specific effects on organizational outcomes.
Showing items related by title, author, creator and subject.
Understanding the relationship between information systems investment and organisational performance: developing and testing a conceptual model in the Australian financial services sectorMaimbo, Hilangwa (2004)The research reported in this thesis was an exploratory study that investigated the relationship between Information Systems (IS) investment and organisational performance and which led to the successfd development and ...
irani, Z.; Sharif, A.; Kamal, M.; Love, Peter (2014)Information systems (IS) facilitate organisations to increase responsiveness and reduce the costs of their supply chain. This paper seeks to make a contribution through exploring and visualising knowledge mapping from the ...
Private equity takeovers in Australia : three essays on motivation, managerial share ownership and governance effectsRashid, Mamunur (2012)Private equity transactions have grown considerably during the last few years. With an increase in the growth and size of this market, it has become increasingly important to understand the economic forces behind these ...